Q2 (QTWO) Q4 2024 earnings summary

Executive summary

• Q4 and full-year 2024 results exceeded guidance, with non-GAAP revenue up 13% and adjusted EBITDA up 62% year-over-year, driven by strong sales execution, record renewal activity, and best bookings quarter in company history.

• Bookings performance was balanced between net new and expansion wins, with 25 Tier 1 and enterprise deals signed, and renewal bookings up 80% year-over-year.

• Innovation Studio and risk/fraud solutions were key differentiators, with bookings more than doubling year-over-year and fraud solutions among the fastest-growing segments.

• The company reached its Rule of 30 goal on a total revenue basis in the second half of the year and is positioned for continued value delivery in 2025 and beyond.

• Addition of Andre Mintz to the board, bringing expertise in privacy, cybersecurity, and fintech.

Financial highlights

• Q4 non-GAAP revenue was $183.0M, up 13% year-over-year and 5% sequentially; full-year non-GAAP revenue was $696.5M, up 12%.

• Adjusted EBITDA for Q4 was $37.6M (20.6%–21% margin), up 62% year-over-year; full-year adjusted EBITDA was $125.3M (18% margin), up 63%.

• Free cash flow for 2024 was $107M, with an 85%+ conversion rate of adjusted EBITDA.

• Cash, cash equivalents, and investments at year-end totaled $447M.

• Q4 GAAP net income was $0.2M; full-year GAAP net loss was $38.5M.

Outlook and guidance

• Q1 2025 revenue guidance: $184M–$188M; full-year 2025 revenue guidance: $772M–$779M (11–12% growth).

• Q1 2025 adjusted EBITDA: $36M–$39M; full-year 2025 adjusted EBITDA: $165M–$170M (21–22% margin).

• Updated three-year framework: average annual subscription revenue growth target raised to 15%, adjusted EBITDA margin expansion to 360 bps, and 2026 free cash flow conversion target increased to >85%.

• 2026 subscription revenue growth expected at 13%, with a focus on achieving a Rule of 40 for subscription revenue.